LONDON: Copper prices slipped on Monday, weighed down by worries about the economy in top metals consumer China as it grapples with fresh COVID-19 cases, and uncertainty over US interest rate hikes.
Three-month copper on the London Metal Exchange fell 1.9% to $8,381.50 a tonne by 1700 GMT after touching its highest level in nearly six months on Friday.
US Comex copper futures dropped 1.8% to $3.81 a lb.
Coronavirus symptoms are spreading rapidly in China after authorities began dismantling stringent measures against the disease, fuelling fears a wave in infections could heap pressure on its fragile health system and drive businesses to a halt.
“We can see that China is in a really poor state at the moment in terms of its economy. Things are turning up from quite a low level, so it’s a question of whether prices reflect where we are right now,” said Dan Smith, head of research at Amalgamated Metals Trading.
“We feel that we’re going to go lower in base metals over the next few weeks because of these problems in China.” Many metals producers in China have decided to retain COVID curbs in their factories to minimize infections and their impact on production.
The most-traded January copper contract on the Shanghai Futures Exchange fell 1.2% to 66,030 yuan ($9,469.65) a tonne.
Also hitting sentiment was uncertainty over whether the US Federal Reserve would ease the pace of interest rate hikes at its policy meeting this week.
The European Central Bank and the Bank of England are also set to announce interest rate hikes during the week.
CITIC Futures said in a report that global central banks will likely stick with tight monetary policies, which will slow down global economic growth and subdue copper demand, against rising supply in the market.
It forecast LME copper prices to decline next year to an average of $7,700 a tonne, keeping range-bound between $6,900 and 8,500 a tonne.
Among other metals, LME aluminium lost 2.8% to $2,411 a tonne, lead eased 1.1% to $2,176.50, tin slid 1.8% to $23,850, nickel dipped 0.2% to $29,375, but zinc gained 0.9% to $3,268.